HEALTH CARE BILL PASSED BY HOUSE INTENSIFIES FUROR

By ROBERT PEAR

Published: October 7, 1999

WASHINGTON, Oct. 6—
The House of Representatives today passed a bill creating tax breaks to help millions of people buy health insurance. But it also took a procedural step that may jeopardize legislation to define patients' rights and regulate health maintenance organizations.

President Clinton and House Democrats cried foul. The White House said Mr. Clinton would veto the bill authorizing new tax breaks for the purchase of health insurance if the measure reached his desk in the form approved by the House tonight. The bill's benefits would go mainly to a small number of healthy, affluent people, the Administration said.

For months, Mr. Clinton and House Democrats have demanded a House debate on legislation to set stringent, enforceable Federal standards for H.M.O.'s and insurance companies. They got their wish today. The debate began.

But House Republicans insisted that the House first take up a separate bill that would create tax breaks and insurance-pooling arrangements to help individuals and small businesses buy health insurance.

Republicans said the bill, which encourages the use of tax-free savings accounts to set aside money for routine medical expenses, could help millions of people without insurance. But the White House said the bill would cost more than $40 billion over 10 years and would help fewer than 1 percent of the people who lack coverage, mainly healthy people with higher incomes.

In an unusual procedural move, the Republican majority voted today to yoke this tax bill to whatever patient protection bill is approved by the House on Thursday. That will have the effect of draining support from the most popular patient protection bill, which is backed by many Democrats who oppose the tax bill.

Further clouding the chances of a patient protection bill, Republicans refused to let Democrats include a way to pay the costs of a bill. As a matter of principle, fiscal conservatives in both parties generally refuse to vote for legislation unless there is a clear way to pay for it.

Democrats and many Republicans said they wanted a patient protection bill to help people denied care by H.M.O.'s. But Speaker J. Dennis Hastert said, ''The most important patient protection is to provide health care coverage for people who do not now have it.''

House Democrats said they had enough votes to pass a popular bipartisan H.M.O. patients' rights bill, drafted by Representatives Charlie Norwood, Republican of Georgia, and John D. Dingell, Democrat of Michigan.

But Mr. Clinton said today: ''The House leaders concocted a process filled with enough poison pills and legislative sleights of hand to practically guarantee the defeat of this bill. This is a travesty. It's the sort of thing they did to kill common-sense gun legislation in the aftermath of Littleton.''

Republicans rejected the criticism, saying Democrats wanted a political issue for next year's elections rather than genuine patient protections. Representative David Dreier of California, who wrote the debate rules as House Rules Committee chairman, said Mr. Clinton's criticism was ''just preposterous.''

Republicans cited a new Census Bureau report showing an increase in the uninsured as evidence that Congress must deal first with their problems before worrying about new rights for people who already have coverage. On Sunday, the bureau reported that the number of people without health insurance rose last year by 833,000, to 44.3 million.

The bill to create tax breaks and other incentives for the purchase of insurance was approved tonight by a vote of 227 to 205. Voting in favor of the measure were 216 Republicans and 11 Democrats.

The Democrats who voted for the measure were Robert E. (Bud) Cramer Jr. of Alabama; Pat Danner of Missouri; Cal Dooley of California; Michael P. Forbes of New York; Virgil H. Goode Jr. of Virginia; Bart Gordon of Tennessee; William O. Lipinski of Illinois; Ken Lucas of Kentucky; Jim Maloney of Connecticut; James P. Moran of Virginia, and Adam Smith of Washington.

Five Republicans joined 199 Democrats and one independent in opposing it. Republicans voting against the bill were Tom Campbell of California, Greg Ganske of Iowa, Benjamin A. Gilman of upstate New York, Mr. Norwood and Constance A. Morella of Maryland.

The House is scheduled to vote on Thursday on proposals to define patients' rights. If one of those bills survives, it would be merged with the bill intended to expand access to health insurance. And the package would be sent to the Senate, which approved a more limited set of patients' rights in July.

All the major ''patients' rights'' bills in the House and the Senate would guarantee access to emergency medical care, allow patients to appeal coverage decisions to an independent board and permit doctors to talk freely with patients about treatment options. A majority of House members also want to allow injured patients to sue H.M.O.'s for damages caused by the improper denial of care. The Senate bill includes no new right to sue.

Representative Martin Frost, Democrat of Texas, said the merger of the two bills without a separate vote was ''a very peculiar procedure,'' devised by Republican leaders to ''derail meaningful regulation of the managed-care industry.'' The tactic, he said, ''may well doom'' enactment of legislation to define patients' rights.

Democrats denounced the rules of debate as a Machiavellian tactic to weaken support for the Norwood-Dingell bill among members of both parties. And, they conceded, it might work, but the outcome is uncertain.

Representative Richard A. Gephardt of Missouri, the Democratic floor leader, said that passage of a patients' rights bill was ''severely endangered'' by the Republican rules of debate, approved today by a party-line vote of 221 to 209.

The Norwood-Dingell bill has a comparatively modest cost, $7 billion over five years. By contrast, the tax breaks for the uninsured are estimated to cost $47 billion over 10 years. Neither bill pays for these costs -- a source of grave concern to fiscal conservatives in both parties.

Representative Porter J. Goss, Republican of Florida, said Democrats had begun to worry about the cost of their patients' rights bill ''only at the last minute.''

The bill is expected to cause a loss of Federal revenue for this reason: Health insurance premiums would rise slightly as H.M.O.'s and other health plans provide more care and incur new administrative costs. Employers would claim larger tax deductions for the cost of such insurance. Tax collections from employers would decline slightly, as a result.

Democrats said they wanted to pay for the cost of their patients' rights bill, but Republicans refused to allow any amendment for that purpose. As a result, Mr. Gephardt predicted, ''We'll lose a pretty big number of Democrats'' when the House votes on passage of the patients' rights bill.

The bill passed today includes these measures to help the uninsured:

*People who do not receive health benefits from their employers could take a tax deduction for the cost of any health insurance they purchase on their own. The deduction would take effect gradually from 2002 to 2007.

*The Government would widen access to the tax-free savings accounts used to pay medical expenses. Congress agreed to test such ''medical savings accounts'' in 1996, but fewer than 60,000 people have taken advantage of the opportunity.

*Trade associations and chambers of commerce could establish group health plans for their members across the country. Republicans say these ''association health plans'' would allow small employers to pool their purchasing power and obtain discounts similar to those that big employers now get from health insurance companies.

In addition, under the House bill, people could take a tax deduction for the premiums on individual insurance covering the costs of long-term care. And a person who cares for an elderly relative could take an additional personal exemption. The amount of the exemption is now set at $2,750.

Photos: Representatives David Dreier, top left, and Porter J. Goss, both Republicans, discussed health legislation that was before the House yesterday. Below, Representatives Robert Menendez, left, Patrick J. Kennedy and David E. Bonior, all Democrats, left after a news conference denouncing the Republican plans. (Photographs by Justin Lane for The New York Times)(pg. A1); Representative Richard A. Gephardt of Missouri, the Democratic floor leader, answered questions yesterday about the health bill before the House. He was in a radio room in the Capitol, set up by Democrats. (Justin Lane for The New York Times)(pg. A26)